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Weld officials investigating Abound Solar officials

DA's office: possible fraud, misrepresentation committed

By Tony KindelspireLongmont Times-Call

Posted:
10/25/2012 02:04:24 PM MDT

Updated:
10/25/2012 07:56:25 PM MDT

LONGMONT -- The Weld County District Attorney's office confirmed Thursday that it has launched a criminal investigation into officials at bankrupt Abound Solar, whose manufacturing facility was located along the Interstate 25 Frontage Road but had a Longmont address.

Abound, which manufactured solar panels and once employed about 400 people at its Longmont facility, filed for federal bankruptcy protection in early July following a wave of layoffs earlier in the year that cut its work force by 70 percent. It cut its remaining 125 employees when it filed for bankruptcy.

Weld County District Attorney Ken Buck said the investigation is in its early stages and no one at the company has been charged with any crime.

Carts of finished solar panels sit at Abound Solar east of Longmont in 2011. The company is under investigation for possible securities fraud after filing for federal bankruptcy protection in early July.
(
RICHARD M. HACKETT
)

In the statement, he said his office is "looking into possible instances of securities fraud based on allegations that officials at Abound Solar knew products the company was selling were defective, and then asked investors to invest in the company without telling them about the defective products."

Abound was called AVA Solar when it was launched based on technology developed at Colorado State University. It opened its Longmont manufacturing facility in 2009, and in 2010 it received a $400 million loan guarantee from the U.S. Department of Energy, which the company said it would use to ramp up production locally and build a bigger manufacturing facility in central Indiana.

But the maker of thin-film photovoltaic modules fell on hard times, with the company blaming the glut of cheaper, Chinese-built solar panels that were government subsidized and dumped onto the global market.

But earlier this month the conservative-leaning Daily Caller website, citing anonymous sources, said company officials had knowingly built, sold and installed solar panels it knew didn't work properly. In a story it published Oct. 2, it quoted an anonymous "internal source" at Abound as saying, "Our solar modules worked as long as you didn't put them in the sun."

Buck's statement said his office is also looking into a bridge loan the company received while it was waiting for the federally guaranteed loans to come through, and whether company officials misled the lending institutions they obtained the bridge loan from.

A third investigation, the statement said, is looking into possible consumer fraud and whether officials at Abound knowingly sold defective products to consumers.

Attempts to reach Abound Solar were unsuccessful Thursday. The statement from Buck's office said that because its investigation is ongoing, it would be making no further announcements regarding it at this time.

The statement also noted that an investigation of the company by members of the U.S. House Energy and Commerce Committee is unrelated to the Weld County District Attorney's Office's investigations.

House Republicans are investigating Abound just as they have launched an investigation into Solyndra, a California-based thin-film solar panel maker that went bankrupt in 2011, leaving taxpayers responsible for a $535 million loan guarantee.

After the Solyndra failure, the DOE tightened up its loan guarantee process, which negatively affected Abound's access to capital.

"(Abound) awaited $10 million from the DOE and $10 million from its investors but had a bit of a chicken-and-egg problem," Eric Wesoff, a GreentechMedia analyst, wrote in his blog in June. "The DOE was waiting for the investors and the investors were waiting for the DOE."

Abound had used $70.9 million of the DOE's $400 million loan guarantee when it went into bankruptcy. It had also had $300 million in private investments, according to its website.

Aside from the district attorney's investigation, Weld County is pursuing for what it claims is nearly $2 million in property taxes it is owed for this year and next. The company also owed the St. Vrain Valley School District about $513,000 in taxes this year and Mountain View Fire Rescue $126,000.

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